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So what

IFM Global Infrastructure Fund agreed to acquire Buckeye Partners for $41.50 per unit in cash last month. The deal values the MLP at $10.3 billion and represents a 27.5% premium to its trading price before the acquisition announcement.

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The transaction came well after Buckeye Partners completed its strategic review last November. The company took several actions as a result of that process to shore up its financial profile, including selling several assets and reducing its distribution to investors. Those moves helped improve the company's balance sheet, which made it a much more attractive acquisition candidate for a private equity fund.

However, while the company's asset sales and distribution reduction have improved its financial profile, they're acting as a near-term drag on earnings. That was evident during the first quarter, where Buckeye Partners reported that its cash flow declined by 15% compared to the year-ago period. While the company expects earnings to start growing again when its current slate of expansion projects enter service in the next year, those asset sales will remain a headwind in the near term.

Now what

Units of Buckeye Partners initially soared past the agreed buyout price on speculation that a higher offer might emerge. While the company's assets make it an attractive acquisition target for another MLP, a bidding war seems unlikely given the all-cash offer and purchase price premium. Because of that, investors should move past Buckeye and consider other options.

Author

Matthew is a senior energy and materials specialist with The Motley Fool. He graduated from Liberty University with a degree in Biblical Studies and a Masters of Business Administration. You can follow him on Twitter for the latest news and analysis of the energy and materials industries: Follow @matthewdilallo